I suggest rather that it is the fruit of a strategy change. Every other phone (that I know of) you typically obtain by walking into a store. Nexus One is only available online, to the point that they don't have them in T-Mobile stores to demonstrate to customers. Whether this will change with AT&T I don't know.
Why? I'm not sure. But it strikes me that it costs a lot of money to launch a new product such as a cellphone. For a competing model such as the Droid I've seen many TV ads, billboards, print media adverts, flyers, people in Verizon employee uniforms on the street, special merchandising displays in the stores, and so on. I can't guess at the actual marketing spend for this but it must be considerable - tens of millions wouldn't surprise me.
Companies spend all that money on advertising because it's the quickest way to drive sales and recoup their development investment within as few quarters as possible. Now, we know Google is absolutely awash in cash. what if they took the view that they could easily afford to sit out several quarters, perhaps over a year, for the device to become popular rather than spending as much on the marketing as they did on the hardware development? A good many of their products seem to be released rather than launched, and allowed to gain momentum slowly, which also gives them plenty of time to refine and improve the product without committing infrastructure to an avalanche of support requests that might or might not materialize. This might be why Google has never engaged in any large-scale layoffs - they don't over-hire to begin with.
When you think about it, sales of 135,000 for a >$500 device based only on a picture, a spec sheet, and Google's good name, without any traditional advertising whatsoever, is rather impressive. That's $71 million in revenue for a company that has never sold any consumer hardware before. True, only a 6th as much as the last iPhone and the Droid over a similar period, but with minimal launch costs. And remember Apple having to cut the iPhone price by 30% in 2007 and then send checks to unhappy early adopters? No sign of that so far, despite the phone's high sticker price.
Why? I'm not sure. But it strikes me that it costs a lot of money to launch a new product such as a cellphone. For a competing model such as the Droid I've seen many TV ads, billboards, print media adverts, flyers, people in Verizon employee uniforms on the street, special merchandising displays in the stores, and so on. I can't guess at the actual marketing spend for this but it must be considerable - tens of millions wouldn't surprise me.
Companies spend all that money on advertising because it's the quickest way to drive sales and recoup their development investment within as few quarters as possible. Now, we know Google is absolutely awash in cash. what if they took the view that they could easily afford to sit out several quarters, perhaps over a year, for the device to become popular rather than spending as much on the marketing as they did on the hardware development? A good many of their products seem to be released rather than launched, and allowed to gain momentum slowly, which also gives them plenty of time to refine and improve the product without committing infrastructure to an avalanche of support requests that might or might not materialize. This might be why Google has never engaged in any large-scale layoffs - they don't over-hire to begin with.
When you think about it, sales of 135,000 for a >$500 device based only on a picture, a spec sheet, and Google's good name, without any traditional advertising whatsoever, is rather impressive. That's $71 million in revenue for a company that has never sold any consumer hardware before. True, only a 6th as much as the last iPhone and the Droid over a similar period, but with minimal launch costs. And remember Apple having to cut the iPhone price by 30% in 2007 and then send checks to unhappy early adopters? No sign of that so far, despite the phone's high sticker price.
Disclaimer: I bought a Nexus One last week. AMA.